Holtec International, the energy technology company that built a new facility in Camden after it was awarded $260 million in state tax credits in 2014, has filed a lawsuit against the New Jersey Economic Development Authority (EDA).
The suit, filed in Superior Court of Mercer County, accuses the state agency of violating its contract by failing to pay Holtec the $26 million in tax credits owed to the company in 2019.
The tax credit award is disbursed over 10 years, and companies can either use the credits to offset their tax bills or sell them for cash. According to the suit, Holtec borrowed money, and is obligated to repay the loans by transferring its state tax credits to “qualified purchasers.”
“To avoid being in breach of its own contractual obligations, Holtec was thus forced to make cash payments of approximately $26 million to these purchasers,” the suit says. “Unless the EDA is forced to comply or reverses its position, Holtec will [continue] to be significantly harmed on an annual basis.”
In a statement Tuesday, Holtec suggested it had fallen victim to a political fight between Gov. Phil Murphy, who has criticized the tax incentive program, and South Jersey Democrats.
“The media have widely reported on the bitter infighting between the state’s politicians that seems to have degenerated to the point where personal feuds outweigh sensible public policy,” the statement said. “By failing to honor its uncontestable obligation to deliver the required tax certificate, New Jersey is broadcasting to the world that it is an untrustworthy partner. By politicizing its business commitments, the state appears bent on discouraging future investors in its economy while scaring away those who are already here.”
The EDA declined to comment Tuesday evening.
Holtec came under scrutiny last year when a task force created by Murphy questioned whether the company had misled state officials on its tax credit application.
The application asked whether the company had been prohibited from working as a contractor at a state or federal agency. Holtec answered “no,” even though a federal agency had temporarily debarred the company in 2010 in the aftermath of an inspector general investigation that raised questions about payments Holtec had allegedly made to a procurement manager in the early 2000s.
When the discrepancy came to light, Holtec said the omission was an oversight.
Holtec acknowledged in the suit that it was once prohibited from doing business with the federal government, but the company argues that under “EDA’s own regulations, the brief debarment would not have affected Holtec’s eligibility to receive a Grow Program award.”
The EDA informed Holtec last year that the agency wanted to review matters further, through “document demands, witness interviews, and the like,” the suit says. Holtec alleges that state officials did not “specify” the issues they wanted to review, or “what the legal basis was for the EDA [to] conduct such an open-ended inquiry.”